CD (a minor) v O

The court may use the Variation of Trusts Act 1958 to vary trusts arising under a settlement for the benefit of a minor who is absolutely entitled to the trust property. This includes a bare trust and a separately treated fund forming part of a larger trust fund. The court may therefore vary the trusts so that the whole fund may be applied under section 32 of the Trustee Act 1925, removing the statutory half-limit on advancement where the variation benefits the minor.

The claimant, aged 12, was absolutely entitled to an equal share of the proceeds of two life insurance policies held on trust for three minors. Income and part of the capital had been used for her school fees, but the fund was becoming inadequate. Section 32 of the Trustee Act 1925 ordinarily limited advancement to half of her presumptive or vested share.

On a paper application, the claimant sought approval of a variation permitting the whole of her fund to be applied for her education. The central issue was whether the court could use the Variation of Trusts Act 1958 for that purpose.

1. Application approved. The court approved a variation permitting the powers under section 32 of the Trustee Act 1925 to be exercised over the whole of the claimant’s fund, because that result was for her benefit.
2. Section 31 of the Trustee Act 1925 plainly applied to property held on trust for a minor absolutely. Section 32 was also applicable: its express reference to a person absolutely entitled showed that the statutory advancement power extended to the present trusts.
3. The court possessed an ancient Chancery jurisdiction to authorise the application of income and, in limited circumstances, capital for a minor’s maintenance, even where the trust instrument did not authorise it. The court considered that jurisdiction a possible basis for the order, but preferred to proceed under the 1958 Act.
4. The expression “property ... held on trusts arising ... under any will settlement or other disposition” included both the whole trust fund and the claimant’s separately treated fund. The fact that the fund was held on a bare trust, and that the claimant was absolutely entitled, did not prevent the Act applying where the beneficiary lacked full legal capacity.
5. The observation in Allen v Distillers Company (Biochemicals) Ltd that the Act contemplated more than one beneficial interest was unnecessary to that decision and was incorrect. That case was materially different because it concerned compensation money with no prior trust. The court did not decide whether a variation could reduce an absolutely entitled minor’s entitlement in other circumstances.

Not stated in the judgment.